Public choice theory is a branch of economics that studies the decision-making behavior of voters, politicians and government officials from the perspective of economic theory, namely game theory and decision theory. It can be considered as a bridge between economics and political science. Public choice theory may also be referred to as rational choice theory, positive political theory, social choice theory, and political economic theory. Economics (from the Greek οίκος [oikos], family, household, estate, and νομος [nomos], custom, law, hence household management and management of the state) is a social science that studies the production, distribution, trade and consumption of goods and services. ... For the Finno-Ugric people, see Votes. ... A politician is an individual involved in politics, sometimes this may include political scientists. ... Game theory is a branch of applied mathematics that studies strategic situations where players choose different actions in an attempt to maximize their returns. ... Decision theory is an interdisciplinary area of study, related to and of interest to practitioners in mathematics, statistics, economics, philosophy, management and psychology. ... Political science is a social science discipline that deals with the theory and practice of politics and the description and analysis of political systems and political behavior. ... It has been suggested that this article or section be merged with Decision theory. ... Positive political theory or explanatory political theory is the study of politics using formal methods such as set theory, statistical analysis, and game theory. ... Social choice theory studies how individual preferences are aggregated to form a collective choice, such as, for example in voting systems (also known as social choice functions or systems). ...

Perspective

Prior to the emergence of public choice theory, many economists tended to consider the government as an agent outside the scope of economic theory, whose actions depend on different considerations than those driving economic agents. (The many other economists who did place the state and its agents within such theory would include Vilfredo Pareto.) Vilfredo Federico Damaso Pareto (born July 15, 1848 in Paris, France - died August 19, 1923 in Lausanne, Switzerland) made several important contributions to economics, sociology and moral philosophy, especially in the study of income distribution and in the analysis of individuals choices. ...

Public choice theory attempts to look at governments from the perspective of the bureaucrats and politicians who compose them, and makes the assumption that they act in a self-interested way for the purpose of maximizing their own economic benefits (e.g. their personal wealth). The theory aims to apply economic analysis (usually decision theory and game theory) to the political decision-making process in order to reveal certain systematic trends towards inefficient government policies. Decision theory is an interdisciplinary area of study, related to and of interest to practitioners in mathematics, statistics, economics, philosophy, management and psychology. ... Game theory is a branch of applied mathematics that studies strategic situations where players choose different actions in an attempt to maximize their returns. ...

Positive public choice theory focuses on the question of what government policies are likely to be implemented in a given political setting, while normative public choice theory considers what policies would produce a desirable outcome if they were implemented.

Claims

One of the basic claims that obtain from public choice theory is that good government policies in a democracy are an underprovided public good, because of the rational ignorance of the voters. Each voter is faced with an infinitesimally small probability that his vote will change the result of the elections, while gathering the relevant information necessary for a well-informed voting decision requires substantial time and effort. Therefore, the rational decision for each voter is to be generally ignorant of politics and perhaps even abstain from voting. Rational choice theorists claim that this explains the gross ignorance of most citizens in modern democracies as well as low voter turnout. In economics, a public good is a good that is hard or even impossible to produce for private profit, because the market fails to account for its large beneficial externalities. ... Rational ignorance is a term most often found in economics, particularly public choice theory, but also used in other disciplines which study rationality and choice, including philosophy (epistemology) and game theory. ...

While the good government tends to be a pure public good for the mass of voters, there exists a plethora of various interest groups that have strong incentives for lobbying the government to implement specific inefficient policies that would benefit them at the expense of the general public. For example, lobbying by the sugar manufacturers might result in an inefficient subsidy for the production of sugar, either direct or by protectionist measures. The costs of such inefficient policy are dispersed over all citizens, and therefore unnoticeable to each individual. On the other hand, the benefits are shared by a very small special interest group, who has very strong incentives to perpetuate the policy by further lobbying. The vast majority of voters will be completely unaware of the whole affair due to the phenomenon of rational ignorance. Therefore, theorists expect that numerous special interests will be able to successfully lobby for various inefficient policies. In economics, a public good is a good that is hard or even impossible to produce for private profit, because the market fails to account for its large beneficial externalities. ... An interest group (also called an advocacy group, lobbying group, pressure group or special interest) is a group, however loosely or tightly organized, doing advocacy: those determined to encourage or prevent changes in public policy without trying to be elected. ... Lobbying is the practice of private advocacy with the goal of influencing a governing body by promoting a point of view that is conducive to an individuals or organizations goals. ... This article or section contains information that has not been verified and thus might not be reliable. ... Protectionism is the economic policy of promoting favored domestic industries through the use of high tariffs and other regulations to discourage imports. ...

In the public choice theory, such scenarios of inefficient government policies are referred to as government failure — a term akin to the market failure scenarios familiar from the traditional economic theory. Government failure is a situation in which the government intervenes to correct for externalities and ends up making things worse. ... Market failure is a situation in which markets do not efficiently organize production or allocate goods and services to consumers (for example, a failure to allocate goods in a way some see as socially or morally preferable). ...

Public Choice economics often results in conclusions that would suggest preference for small-government economic policies. Still, this is not always the case. However, Kenneth Arrow (whose impossibility theorem is the result of public choice theory provoking the most hostile criticism) has supported some decidedly left-wing policies, and Mancur Olson was an advocate of strong government and instead opposed political interest group lobbying. In voting systems, Arrow’s impossibility theorem, or Arrow’s paradox, demonstrates that no voting system meets all of a certain set of criteria when there are three or more choices. ... Professor Mancur Olson (1932 - February 19, 1998) was a leading social scientist who, at the time of his death, worked at the University of Maryland, College Park. ... An interest group (also called an advocacy group, lobbying group, pressure group or special interest) is a group, however loosely or tightly organized, doing advocacy: those determined to encourage or prevent changes in public policy without trying to be elected. ...

People and institutions

The modern economic literature in Public Choice began with Duncan Black, who in 1948 identified the underlying concepts of what would become the Median Voter Theory. Significant founding works of the field include Kenneth Arrow's Social Choice and Individual Values (1951), Anthony Downs's An Economic Theory of Democracy (1957), Mancur Olson's The Logic of Collective Action (1965) and James M. Buchanan and Gordon Tullock's The Calculus of Consent (1962). Public choice theory is commonly associated with universities in Virginia, most notably George Mason University and the University of Virginia, where Tullock and Buchanan first worked in developing the theory. Duncan Black (May 23, 1908 - January 14, 1991) was responsible for unearthing the work of many early political scientists, including Charles Dodgson, and was responsible for the Black electoral system, a variant upon the Condorcet method whereby, in the absence of a Condorcet winner (e. ... The parties A and B want to catch the median voters and they will walk to the centre. ... Kenneth Arrow Kenneth Joseph Arrow (born August 23, 1921) is an American economist, winner of the Bank of Sweden Prize in Economic Sciences in 1972. ... Anthony Downs is a noted scholar in public policy, and since 1977 is a Senior Fellow at the Brookings Institution in Washington D.C.. Downs has served as a consultant to many of the nations largest corporations, including the Department of Housing and Urban Development and the White House. ... Professor Mancur Olson (1932 - February 19, 1998) was a leading social scientist who, at the time of his death, worked at the University of Maryland, College Park. ... For the president of this name, see James Buchanan. ... Gordon Tullock is currently professor of law and economics at the George Mason University School of Law in Arlington, Virginia. ... Official language(s) English Capital Richmond Largest city Virginia Beach Area  - Total  - Width  - Length  - % water  - Latitude  - Longitude Ranked 35th 110,862 km² 320 km 690 km 7. ... George Mason Universitys Fairfax campus George Mason University or GMU, also referred to by locals and students as simply Mason, is an institution of higher learning in the Commonwealth of Virginia, with campuses in Arlington, Fairfax, and Prince William County, Virginia, all in the suburbs of Washington, DC. In... Website Virginia. ...

Public choice's application to government regulation was developed by George Stigler (1971) and Sam Peltzman (1976). William Niskanen is generally considered the founder of Public Choice literature on the bureaucracy. George Joseph Stigler (1911 - 1991) was a U.S. economist. ... Bureaucracy is a concept in sociology and political science. ...

Several notable Public Choice scholars have been awarded the Bank of Sweden Prize in Economic Sciences, including Buchanan (1986), Stigler (1982), Arrow (1972), and Gary Becker (1992). The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel (in Swedish Sveriges Riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is a prize awarded each year for outstanding intellectual contributions in the field of economics. ... Gary Stanley Becker (born December 2, 1930) is an American economist. ...

Criticism

In their 1994 book Pathologies of Rational Choice Theory, political scientists Donald P. Green and Ian Shapiro argue that public choice theory has contributed less to the field than its popularity suggests. They write:

"The discrepancy between the faith that practicioners place in rational choice theory and its failure to deliver empirically warrents closer inspection of rational choice [aka public choice] theorizing as a scientivic enterprise." (pg 6)

A collection of essays that respond (in support and against) Pathologies of Rational Choice Theory is compiled in the 1996 book The Rational Choice Controversy : Economic Models of Politics Reconsidered edited by Jeffrey Friedman.

External links

• Notes for a course in public choice by Bryan Caplan
• Introduction to Public Choice Theory, by Leon Felkins. Contains numerous links of interest
• Collected Works of James M. Buchanan at the Library of Economics and Liberty. Includes The Calculus of Consent, by James M. Buchanan and Gordon Tullock
• "Public Choice Theory" at the Concise Encyclopedia of Economics,